House Republicans’ Tax Package: Changes and Challenges

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House Republicans’ Tax Package: Changes and Challenges

Potential tax proposals focusing on R&D credits and 1099-K relief for online sellers are underway.

House Republicans are getting ready to announce a tax package as the debt ceiling deadline approaches. The package could bring major changes to the tax system. The debt ceiling negotiations are intense, but now the focus is shifting to legislative actions after reaching an agreement.

According to a report from Tax Notes, House Republicans plan to introduce the 2023 tax package once the debt ceiling deal is finalized. This package is expected to address important tax issues, including research and development (R&D) credits and relief for online sellers affected by the 1099-rule K.

R&D Taxes

R&D tax relief is a key part of the proposed package. Many companies hope Congress will address R&D tax relief next year. They had to write off R&D expenses for five years in 2022. The federal R&D tax credit encourages businesses to invest in research and development. This allows them to claim a tax credit for qualifying expenses. However, gaining bipartisan support for the proposed R&D tax changes in Congress has proven difficult.

1099-k issues faced by Online sellers

Another issue that could be tackled in the tax package is a relief for online sellers affected by the 1099-K rule. Previously, meeting specific transaction and payment thresholds was necessary to get a 1099-K. Starting in 2023, a transaction as low as $600 could trigger a 1099-K, causing confusion and burden for many people. Congress has an opportunity to help those affected, potentially with bipartisan support. The 1099-K Coalition for Equity, including online marketplaces like eBay, PayPal, and Etsy, advocates for a higher threshold to benefit casual sellers.

Trump’s tax cuts

Furthermore, House Republicans intend to propose legislation to make Trump’s tax cuts permanent. The Tax Cuts and Jobs Act of 2017 introduced individual tax cuts expiring after 2025. Making these cuts permanent is a top priority for Republicans, but timing, feasibility, and reconciliation in the ongoing debt ceiling negotiations raise concerns about spending.

As House Republicans prepare to introduce the tax package, the response of Senate lawmakers and the overall political landscape will play a crucial role in determining the fate of the proposed tax changes.

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